Coinbase is losing some institutional trading division heavyweights

Posted: 1 November 2018 6:16 pm
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How are Coinbase's institutional offerings doing?

Earlier this month, Coinbase's fifth employee, general manager and vice president Adam White, left Coinbase to become COO at Intercontinental Exchange's Bakkt. It might have started a trend, with one of his recent hires, head of trading Hunter Merghart, now leaving after six months on the job.

According to sources who spoke to CoinDesk, the departure came after building frustration at a lack of roadmap clarity and resources to build out the institutional wing of Coinbase.

All over the place

Coinbase has deliberately written up a strategy of doing it all and becoming the cryptocurrency company across not only consumer buying and selling, but also institutional trading, custody solutions, various cryptocurrency utilities both directly financial and tangentially-related, and anything else it can bend its expertise towards.

But Coinbase might be struggling a little with its institutional offerings. The most prominent institutional flop might be its Coinbase Index, a cryptocurrency bundle aimed at institutional traders who want broad exposure to a range of cryptocurrencies in the space.

But it turns out there weren't too many of those. Suffering below-anticipated demand, Coinbase shut down the Index offering recently.

"I think the investors are not going to want to pick specific winners or losers," said Coinbase president and CEO Asiff Hirji at the launch of Coinbase Index.

It might have been a misguided assumption though. By all appearances, people are going out of their way to consider the pros and cons of the coins they purchase, and there might be something about the "collectible" nature of cryptocurrency that encourages participants to dive deep into individual projects.

Besides, there's already a perfectly good way to get broad exposure to cryptocurrency as an asset class – it's called buying bitcoin.

At about the same time it closed down the Coinbase Index, a near-identical product, the more consumer-grade "Coinbase Bundle" hit the market, which similarly offers a broad range of exposure to some of the top assets in the cryptocurrency world. Or as some might see it, a perfectly good batch of BTC and ETH with little bits of less-wanted BCH and ETC mixed in.

While the Coinbase Index might be down and out, other institutional products, including Coinbase Custody, Coinbase OTC and more, are still up and running. Whether these are successfully catering to a somewhat limited demand in an increasingly competitive market is still a bit unclear.

Coinbase aims to do it all, but that might be hard to fit into a clear roadmap. In particular, goals like having $5 billion in crypto assets under management might be harder to achieve when the value of those crypto-assets keeps sliding.

Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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